10 Ways to Build a Better Indoor Cultivation Facility

Indoor cultivation allows operators to control nearly every aspect of their cannabis grow, from temperature and humidity to airflow and odor control. Proper facility design is essential to avoid expensive bottlenecks in workflow and detriments to plant health.

At Cannabis Conference 2022, Autumn Karcey, founder and CEO of Cultivo and Alchemy 29; Marlon Mallas, general manager of cultivation at Lume; and Andy Poticha, founder and CEO of Cannabis Facility Construction, took the stage to share tips on how to build—or retrofit—the best indoor facility for growers’ unique operations.

From site selection and the pre-planning stages to important equipment considerations and strategies for dealing with utility costs, here are 10 ways the experts said growers can build a better indoor cultivation facility.

1. Maintain open lines of communication throughout the design process.

Before even starting to plan the design for an indoor cultivation facility, Poticha and Karcey said an operation’s key stakeholders must come together to communicate what is important to them in a grow. A cultivation business’s leadership team should never assume that the team designing and constructing the facility has all the experience necessary to make key decisions, Poticha said, and, on the flip side, the design and construction teams should never assume that they know better than the grower does.

“I think what’s really important is to make sure that all of the stakeholders are in every meeting from the beginning because they all have their own take on what is and what isn’t important to them in their particular space,” Poticha said. “Good designers really are facilitators. They get inside their clients’ head and help articulate what they can’t themselves [put] onto paper. That interaction and that partnership has got to be the start, or it’s all downhill after that.”

Karcey echoed this sentiment, adding that communication among the cultivation and design teams is key and should be encouraged through weekly meetings during the pre-planning process.

“Make sure your growers are talking to your architects and engineers and giving them all of the design feedback that they need because this is not something that’s taught at a university,” she said. “This is not something that, when you go to school for architecture, they’re teaching you how to read grow rooms. This [industry] came about within the last 10 years or so, so [you need] clear communication between all trades.”

2. Know who you are and what your goals are before you start planning your build.

Mallas stressed that a cultivation team should figure out what the company’s end goal is before designing the facility to ensure that the resulting build can support the operation’s longer-term vision.

“If you say I’m going to build a cultivation or construct a company, what is your goal output?” he asked. “That really dictates all your design beyond that. Sometimes, you operate within the confines of, ‘Hey, we already have an established building and we’re just going to have the highest output that we can from this particular building or facility or area.’ But if you’re talking ground-up [construction] and you’re saying that your company needs 10,000 pounds a year [or] 20,000 pounds a year, [or] however many retail [locations] you’re going to have, you need to know that ahead of time because that’s going to dictate everything beyond that.”

The build should be designed based on planned output, Mallas said, as well as how many retail locations the company would like to support in five years, for example.

And since each company is unique and has its own specific goals, the facility design will reflect each operation’s nuances.

“There’s an operational uniqueness because there are nuanced differences that end up dictating what the design is—what kind of lights we’re using, what kind of HVAC equipment we’re using, and then, of course, the conditions that are created within the rooms, whether it be cultivation, processing [or] extraction,” Poticha said. “Those all also can be unique based on the end user.”

Karcey cited a common saying in construction: “Proper pre-planning prevents poor performance.” She said it is essential to know an operation’s budget and have a clear vision of the finished facility before breaking ground on construction.

“I’m a big proponent of proper pre-planning before you go into any design build,” she said. “I want to walk into a facility and visualize the whole thing as soon as I walk into it and know exactly what I’m going to build and then be able to relay that to the contractors that are putting it together. Vision is important and proper pre-planning is important.”

3. Decide whether you or the contractor will steer the project.

Sometimes, a cultivator will approach a contractor with a pre-planned design—the layout, the square footage and all the equipment are already planned out, and the contractor simply builds the grower’s vision. In other cases, contractors will take the lead, asking the cultivator what kind of equipment they need and then recommending the facility’s specifications and requirements from there.

Mallas said there are pros and cons to both approaches.

“The benefit of building it yourself, you can use your experience to really build exactly what you need,” he said. “But the benefit of using the contractor to help you solve these issues is A, you think outside the box a bit because they pull in things from other industries that you haven’t thought about, [and] B, you can hold their feet to the fire.”

4. Thoroughly vet your contractors.

Regardless of who’s taking the lead on the design and build, the experts said cultivators must thoroughly vet their contractors to ensure they are a good fit for the job and that everyone has the same expectations when it comes to the completed project.

“When you’re selecting a general contracting firm, it’s important to understand that in traditional construction, you can be a few inches off,” Karcey said. “You can even be a few feet off in certain buildings. The first thing I tell people is if you’re doing a [tenant improvement project], go in and get accurate as-builts so that your architecture firm can design that appropriately because if we’re inches off in this industry, you’re losing a whole row of lights and it affects your entire pro forma.”

Karcey recommended that growers double-check general contractor’s measurements to ensure that all rooms are measured correctly before tables are laid.

She added that all teams working on the build or retrofit—from the general contractors to the architecture firms—must be able to work well together and follow the plans.

“Construction isn’t construction isn’t construction, particularly in cannabis,” Poticha said. “Your setpoints for anything, whether it’s a table length, percentage of humidity, or degree of temperature in a room, … the team that is executing this work for design as well as for engineering and construction really [needs to understand] that. … They don’t have to be experts in cannabis, but they do have to understand how these things affect, ultimately, the quality and quantity of your yield and what you’re trying to achieve inside of all these rooms.”

5. Understand that each project is unique.

Karcey said she is often asked if she can create a design plan that will apply to any 50,000-square-foot or 100,000-square-foot cannabis cultivation facility that she can sell over and over again to clients, and her answer is no; she has never been in a situation where she can build the same facility twice.

Different geographical areas—from Canada to Michigan to Florida—require different equipment, from HVAC to dehumidification, based on the outdoor environment, for example, and each project must be viewed holistically.

“I always say that all parts of the system are integral to the system as a whole, whether it’s HVAC, lighting, irrigation [or growing] medium,” Karcey said. “You have to look at the project holistically, as a whole, in the environment that you’re functioning in, and start there. And then everything is custom-tailored.”

Mallas provided a real-world example of this and explained that Lume’s location in Michigan means that chillers work in his facility because of the area’s cold winters.

“During those winter months, once it gets below a certain degree—40 or 42 degrees outside—we go into a free cooling mode, where we’re actually using the outside ambient temperature to get rid of our heat,” he said. “For a big portion of the year, we get really cheap cooling with those chillers, which is a really energy efficient part of the facility.”

An operation in Florida, as an example, would require much different cooling considerations.

6. Build in redundancy.

Poticha said that growers must build redundant systems into their facilities so that if a chiller breaks down, for example, there is a generator that can kick on to keep heating and cooling consistent in that area of the grow.

Mallas said that at Lume’s facility, if one of the chillers goes out, the cultivation team gets a notification, and the rest of the chillers pick up the load until the broken chiller is fixed.

“We usually branch our circuits, so whether it’s a chiller or a condenser or whatever type of outdoor equipment that you’re using, I’ll put half on this condenser and half on this condenser in a single room, so I’m only losing one side of it,” Karcey said of her approach to redundancy. “It’s how you electrically engineer that equipment to run to create the redundancy, and that’s very important that you don’t have a whole room go out and that the people who are doing your electrical work together to set up those circuits. I like to do it every other unit, depending on what your system is.”

7. See the equipment in action before installing it in your facility.

While Karcey said manufacturers always test the equipment and use the resulting statistics to set the parameters that go onto the label, she said the testing conditions may not always match the conditions in a grower’s unique facility.

“They’ll take that equipment out to San Diego with 85-degree temps and 30% relative humidity, and they’ll test it there,” she said. “Then that will give them their rating and they’ll put the sticker on the box and then the software will follow suit. We stress these systems out. We put them in a tropical environment that has internal heat gains and expect it to function in the same way that the sticker on the box says. It’s not going to work. … [The] software wasn’t designed for indoor cultivation, and it actually takes a lot of time and experience to retool software so it does what you want it to do and gives you the humidification, dehumidification and values that you’re looking for in your temperature setpoints.”

Mallas recommends seeing the equipment in action in a similar facility before bringing it into an indoor cannabis grow.

“One of the first questions you should ask when they start to give you statistics on how their equipment is supposed to run is, do you have a facility … in our area where I can actually see it operate and actually get real numbers in the field?” he said. “Most companies that we’ve worked with, if they don’t have something in the same state, they have something in a neighboring state or something close by where you can actually see it in operation and talk to the operators.”

8. Be strategic in utility costs.

Utility costs can quickly add up in an indoor cannabis cultivation facility, so the experts offered several tips when it comes to energy efficiency.

Karcey recommended checking what a kilowatt hour costs in a particular area before locating a grow there.

“In Los Angeles, your base kilowatt hour is somewhere around $0.27, and then you can drive three hours out into the desert, and you can hit $0.10, so I know a lot of operators that will pick their building site based on the kilowatt hour,” she said. “That’s very important with your overall COGS. If you have a facility running 300 lights and I’m at $0.10 over here and $0.27 over here and they have the same quality, who do you think is staying in business?”

Having adequate power available can also be a challenge in and of itself, Poticha said.

“There are so many of these places where you don’t necessarily have that choice because power is oversaturated with other buildings that are drawing from it,” he said. “You have the benefit out West of being able to use solar panels. The further you get east, it doesn’t work so well. So, now you’re talking about sometimes using multiple different sources to generate power to be able to run these facilities and what the cost of not only the infrastructure is, but just the availability to even obtain it.”

Therefore, Mallas said that when looking at a site, cultivators should ask about both the availability of specific types of power and the cost associated with each in that area.

Mallas also stressed the importance of sustainability and creating a closed-loop system when possible; for example, Lume operates a biogas generator that turns biomass waste into CO2 and methane, which can take the place of natural gas to a certain extent.

9. Anticipate increased costs and supply chain issues.

With the ongoing COVID-19 pandemic, labor shortages, rising inflation and other challenging economic factors increasing the cost of materials and wreaking havoc on the supply chain, Karcey warned that operators can develop a pro forma for construction only to have it change dramatically three months later.

Planning ahead—and even purchasing equipment ahead of when it is needed—is critical to overcome some of these challenges, she said.

“Even though our plans weren’t even done yet, I bought all of the HVAC for our entire facility, what I thought I would need, ahead of COVID, and that is now nearly double [the cost],” Karcey said. “To think that things are going to come down, that’s not been my experience. Usually, things keep going up because of supply chain issues, and that pre-planning and that construction budgeting is very much something that you have to have your construction manager work with your controller step by step and track everything, every part of the process. Have really clear RFPs.”

If an operator partners with experienced designers and contractors who understand what the grower is trying to achieve, they can likely help the grower choose backup equipment if what the cultivator originally wanted is no longer available—or is too far outside his or her budget, Karcey said.

Poticha said that growers should work with contractors who are fee-based as opposed to those who are paid a percentage of the overall project, as they won’t be incentivized to upsell cultivators on certain equipment or design decisions that increase the overall cost of the build.

However, Poticha said sometimes paying extra for equipment to get a facility up and running is worth it in the long run.

“Time is money,” he said. “Yes, CapEx cost is important, but if you have to wait six months or a year to open, how much are you losing in potential revenue? In most cases, there’s no comparison. The revenue you’ll generate would far exceed the premium.”

Overall, Karcey said it’s important to remain flexible when choosing vendors to help keep timelines and budgets on track. Sometimes, a vendor that a grower has always worked with and trusted might not be available to do the project or have the materials in a timely fashion, and someone else must be called upon to do the job.

10. Examine key factors when deciding between a retrofit and a new build.

The experts reiterated that utility costs are important when deciding whether to undergo a new build or a retrofit.

“Don’t select your site, whether it’s retrofit or built ground-up, until you know what your utility needs are,” Mallas said. “And if what your utility needs are is in excess of what that particular site is able to provide, you need to find out how much it’s going to cost [to upgrade] and what the lead time is for that. Without the right utility needs, even if you built the whole facility and it’s perfect, if you don’t have the right power or gas or water there, you’re going to have a huge problem on your hands.”

Karcey said that chances are, existing power to a retrofitted facility will need upgraded to support indoor cannabis cultivation, and it can take time for the local municipality to complete these upgrades.

Overall access to the site is also important when choosing a location.

“You’re going to have goods coming in and goods going out—how are those going to be distributed?” Poticha asked.

The price tag associated with the build or retrofit is also typically a large deciding factor, the experts said, as is the timeline to getting the facility up and running.

“How fast are you trying to get to market?” Karcey asked. “You know that new build and bringing in all the off-site utilities generally takes you significantly longer than most [tenant improvements].”

In addition, Karcey said that growers should look at the size of the building’s parking lot, as well as its roof structure, to determine whether HVAC equipment can go on the ground near the parking area or if it will need to go on the roof.

Karcey also warned against retrofitting a building constructed primarily of wood, which can harbor pests and pathogens.

“If you do have a facility that’s full of wood, I always recommend encapsulating it with an antimicrobial paint,” she said, adding that any wood on the roof must be hand painted rather than spray painted due to safety concerns. “You have to roll it on because it’s toxic if it’s breathed in through paint sprayers. You could be like Michaelangelo up there trying to paint the Sistine Chapel trying to encapsulate your roof. So, I try to stay away from wood if I can and only use steel structures."